Improve your chances of obtaining financing for your second property

Most people purchasing a second home require some sort of financing – be it a mortgage or personal loan, to help them pay for their second property. But in the midst of the global economic recession it has become more difficult for property buyers to access the kind of financing that they need. Here we take a look at some steps that you can take to increase the chances of having your credit request approved.

Your first step before applying for a loan or a mortgage is to check your credit report. Several websites now allow you to do this for free or for a small fee. Here you can check for any issues that need addressing and it will give you a better idea of how your current financial standing is viewed by banks and lenders.

If you have any outstanding debts, try to clear them or pay off as much as you possibly can before applying for credit. If you have made any late payments recently, it is a good idea to wait a while for these to pass off your credit report before you apply for any financial products too.

Take a good look at your current financial incomings and outgoings. Draw up a budget so that you can clearly see how much you can realistically afford to spend on loan or mortgage repayments, remembering to factor in the affect of any rises in interest rates in the future. This will help you to establish how much you can realistically afford to borrow and will show lenders that you are serious about repayments.

When you have decided on the amount that you need to borrow, you can start shopping around for potential lenders and banks. You can use an online comparison tool to save time and compare several different products and lenders at once.

Make sure that you choose a rate that you can realistically afford to pay back, and then you can set about applying. Try to choose one or two preferred lenders rather than applying to several lenders at once. Remember that if you are declined for credit this can negatively affect your credit score, so try to take as many steps as you can to improve your credit score before you start applying to lenders.

When looking for loans, do not discount your existing bank or lender. Some major banks like Santander have begun offering preferential rates on loans to their existing customers. If you have a proven track record for borrowing and repaying in full, this will stand you in good stead with your existing lender and they may be able to work out a preferential loan rate and tailored repayment package for you.